China’s Supreme Court Recognizes Use of Cryptocurrencies to Settle Debts
In a major development for the cryptocurrency sector in China, the country’s Supreme Court has released new guidelines regarding disputes related to digital assets. This is particularly significant given China’s existing blanket ban on cryptocurrencies, which has been in place since 2017.
According to a report by Wu Blockchain on May 7, the Supreme Court’s guidelines state that settling a debt using a small amount of digital assets would be considered legal if both parties agree. The court recognized that in such scenarios, cryptocurrencies have network virtual properties. However, the court emphasized that this approach would only be permitted if there were no other valid reasons against it.
Exclusive: China’s Supreme Court Issues Financial Trial Requests, Massively Involving Cryptocurrencies. Among them, contracts involving bitcoin mining and agency crypto investment are deemed to be invalid; contracts involving cryptocurrency debts are deemed to be valid. Read more… pic.twitter.com/nEGU5ROXvh
— Wu Blockchain (@WuBlockchain) May 7, 2023
The court’s ruling also clarified that if one party agrees to transfer cryptocurrencies to another, but the receiving party cannot fulfill their end of the deal due to policy restrictions, the court will determine the compensation based on the actual value of the property accepted by the receiving party at the time of signing the contract.
This development is significant as it shows that the regulation of the cryptocurrency sector in China continues to evolve, despite the existing ban. It also indicates that the Chinese government is taking a more nuanced approach to the regulation of digital assets, rather than simply maintaining a blanket ban.
It is important to note, however, that the ruling only applies to small amounts of digital assets used to settle debts arising from mutual exchange, labor service, and other basic relations. This means that larger transactions or more complex uses of digital assets may still be subject to the existing ban.
Overall, this latest development from China’s Supreme Court is a positive sign for the cryptocurrency sector, as it shows that even in a country with a strict ban on digital assets, there is still room for regulatory evolution and a more nuanced approach. It remains to be seen how this ruling will be applied in practice, but it is certainly a step in the right direction for the industry.
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